Multiple Choice
In financial accounting, the balance sheet primarily reports which type of accounts at a specific point in time?
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1. Introduction to Accounting
The Financial Statements
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Which of the following accounts would be reported on an income statement?
A
Retained Earnings
B
Common Stock
C
Service Revenue
D
Accounts Receivable
Verified step by step guidance1
Step 1: Understand the purpose of the income statement. The income statement reports a company's revenues and expenses over a specific period, showing the company's profitability.
Step 2: Identify the types of accounts typically reported on the income statement. These include revenue accounts (e.g., Service Revenue) and expense accounts.
Step 3: Recognize that Retained Earnings and Common Stock are equity accounts reported on the statement of changes in equity or balance sheet, not the income statement.
Step 4: Understand that Accounts Receivable is an asset account reported on the balance sheet, representing money owed to the company, not income earned.
Step 5: Conclude that among the options, only Service Revenue is a revenue account and therefore reported on the income statement.
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